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The impact of cell phone towers on house prices: evidence from Brisbane, Australia

Abstract

The growing public pressure against the spread of cell phone towers in urban areas has created a need to understand their impact on adjacent house prices. A few existing studies are, however, controversial in their methodology and inconclusive in their results. Therefore, our study on the effect of cell phone towers on house prices is designed to avoid these deficiencies. Property transaction data collected from two suburbs within the Brisbane City Council were analysed adopting the spatial hedonic property valuation model. The estimated models were statistically significant and were largely in line with theoretical expectations. The results revealed that proximity to cell phone towers negatively affects house values, decreasing as the distance from the tower increases. A suitable compensation programme for nearby property owners is, therefore, suggested as being an appropriate policy response.

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Fig. 1

Notes

  1. 1.

    See http://www.mer-telecom.com/telecom.

  2. 2.

    See http://www.couriermail.com.au/questnews/west/brookfield-residents-protest-against-mobile-tower-plans/story-fn8m0u4y-1226147998909.

  3. 3.

    The assumption of an independent and identical distribution of error terms in OLS estimation is not satisfied due to the spatial effect (Anselin 2009). In such a case, OLS estimation for coefficient β of the hedonic model is biased and, therefore, the maximum likelihood estimation (MLE) is appropriate. The efficiency and consistency of parameter estimation can be improved through the application of spatial regression models (Mallios et al. 2009).

  4. 4.

    Australian Bureau of Statistics.

  5. 5.

    Decided based on the distribution of the sample.

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Correspondence to Darshana Rajapaksa.

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Rajapaksa, D., Athukorala, W., Managi, S. et al. The impact of cell phone towers on house prices: evidence from Brisbane, Australia. Environ Econ Policy Stud 20, 211–224 (2018) doi:10.1007/s10018-017-0190-9

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Keywords

  • Cell phone towers
  • Externalities
  • Hedonic property valuation
  • Spatial analysis

JEL Classification

  • Q51
  • R23
  • R31